In this post, I am going to explain how the location-identity mapping database populates using Flood and Learn method. Consider the image below where VTEP01 takes the original ARP L2 frame from the HOST01 and then adds VXLAN header which includes L2VNI 20100 (think of it as an overlay L2 interface between VTEPs). VTEP01 will forward into the VXLAN core.
In this scenario, multidestination traffic is handled using IR (as opposed to PIM). At the configuration time, when you configure the VNI at a VTEP, you also map it to a set of appropriate peer IPs.
LEAF01(config)# interface loopback1
LEAF01(config-if)# description VXLAN-VTEP-NVE-IF
LEAF01(config-if)# ip address 192.168.250.1/32
LEAF01(config-if)# ip router isis UNDERLAY
LEAF01(config)# feature nv overlay
LEAF01(config)# feature vn-segment-vlan-based
LEAF01(config)# vlan 100
LEAF01(config-vlan)# vn-segment 20100
LEAF01(config)# interface nve 1
LEAF01(config-if-nve)# no shutdown
LEAF01(config-if-nve)# source-interface loopback 1
LEAF01(config-if-nve)# member vni 20100
LEAF01(config-if-nve-vni)# ingress-replication protocol static
LEAF01(config-if-nve-vni-ingr-rep)# peer-ip 192.168.250.2
LEAF01(config-if-nve-vni-ingr-rep)# peer-ip 192.168.250.3
VXLAN core which is unaware of the inner header (identity), forwards the VXLAN frame based on only outer header (location). So, in our case, VXLAN core – which is typically our spines, are unaware of endpoint addresses (identities).
VTEP02 and VTEP03 receive the VXLAN frame and then perform deencapsulation. They both will learn MAC address of HOST01 and they map it to VTEP01.
There are two other notes here to mention: the subsequent messages are unicast if VTEP01 finds HOST02 location and identity. If there were a way which could distribute the same location-identity mapping across all edges, then the need for flooding could be eliminated.
Workshop
In this scenario, we will configure our very first VXLAN topology with Flood and Learn as well as with Ingress Replication for BUM traffic. In this scenario, IS-IS is configured for underlay:

SPINE01
hostname SPINE01
feature isis
interface Ethernet1/1-4
mtu 9216
description FABRIC
medium p2p
ip unnumbered loopback0
ip router isis UNDERLAY
no shutdown
interface loopback0
description UNDERLAY
ip address 192.168.0.1/32
router isis UNDERLAY
net 49.0000.0000.0001.00
is-type level-2
SPINE02
hostname SPINE02
feature isis
interface Ethernet1/1-4
mtu 9216
description FABRIC
medium p2p
ip unnumbered loopback0
ip router isis UNDERLAY
no shutdown
interface loopback0
description UNDERLAY
ip address 192.168.0.2/32
router isis UNDERLAY
net 49.0000.0000.0002.00
is-type level-2
LEAF01
feature isis
feature vn-segment-vlan-based
feature nv overlay
vlan 100,200
vlan 100
vn-segment 20100
vlan 200
vn-segment 20200
interface nve1
no shutdown
source-interface loopback1
member vni 20100
ingress-replication protocol static
peer-ip 192.168.250.2
peer-ip 192.168.250.3
peer-ip 192.168.250.4
member vni 20200
ingress-replication protocol static
peer-ip 192.168.250.2
peer-ip 192.168.250.3
peer-ip 192.168.250.4
interface Ethernet1/1-2
mtu 9216
description FABRIC
no switchport
medium p2p
ip unnumbered loopback0
ip router isis UNDERLAY
no shutdown
interface Ethernet1/41
switchport access vlan 100
interface loopback0
description UNDERLAY
ip address 192.168.1.1/32
interface loopback1
description VXLAN-VTEP-NVE-IF
ip address 192.168.250.1/32
ip router isis UNDERLAY
router isis UNDERLAY
net 49.0000.0000.1001.00
is-type level-2
LEAF02
feature isis
feature vn-segment-vlan-based
feature nv overlay
vlan 100,200
vlan 100
vn-segment 20100
vlan 200
vn-segment 20200
interface nve1
no shutdown
source-interface loopback1
member vni 20100
ingress-replication protocol static
peer-ip 192.168.250.1
peer-ip 192.168.250.3
peer-ip 192.168.250.4
member vni 20200
ingress-replication protocol static
peer-ip 192.168.250.1
peer-ip 192.168.250.3
peer-ip 192.168.250.4
interface Ethernet1/1-2
mtu 9216
description FABRIC
no switchport
medium p2p
ip unnumbered loopback0
ip router isis UNDERLAY
no shutdown
interface Ethernet1/41
switchport access vlan 100
interface loopback0
description UNDERLAY
ip address 192.168.1.2/32
interface loopback1
description VXLAN-VTEP-NVE-IF
ip address 192.168.250.2/32
ip router isis UNDERLAY
router isis UNDERLAY
net 49.0000.0000.1002.00
is-type level-2
LEAF03
feature isis
feature vn-segment-vlan-based
feature nv overlay
vlan 100,200
vlan 100
vn-segment 20100
vlan 200
vn-segment 20200
interface nve1
no shutdown
source-interface loopback1
member vni 20100
ingress-replication protocol static
peer-ip 192.168.250.1
peer-ip 192.168.250.2
peer-ip 192.168.250.4
member vni 20200
ingress-replication protocol static
peer-ip 192.168.250.1
peer-ip 192.168.250.2
peer-ip 192.168.250.4
interface Ethernet1/1-2
mtu 9216
description FABRIC
no switchport
medium p2p
ip unnumbered loopback0
ip router isis UNDERLAY
no shutdown
interface Ethernet1/41
switchport access vlan 200
interface loopback0
description UNDERLAY
ip address 192.168.1.3/32
interface loopback1
description VXLAN-VTEP-NVE-IF
ip address 192.168.250.3/32
ip router isis UNDERLAY
router isis UNDERLAY
net 49.0000.0000.1003.00
is-type level-2
LEAF04
feature isis
feature vn-segment-vlan-based
feature nv overlay
vlan 100,200
vlan 100
vn-segment 20100
vlan 200
vn-segment 20200
interface nve1
no shutdown
source-interface loopback1
member vni 20100
ingress-replication protocol static
peer-ip 192.168.250.1
peer-ip 192.168.250.2
peer-ip 192.168.250.3
member vni 20200
ingress-replication protocol static
peer-ip 192.168.250.1
peer-ip 192.168.250.2
peer-ip 192.168.250.3
interface Ethernet1/1-2
mtu 9216
description FABRIC
no switchport
medium p2p
ip unnumbered loopback0
ip router isis UNDERLAY
no shutdown
interface Ethernet1/42
switchport access vlan 200
interface loopback0
description UNDERLAY
ip address 192.168.1.4/32
interface loopback1
description VXLAN-VTEP-NVE-IF
ip address 192.168.250.4/32
ip router isis UNDERLAY
router isis UNDERLAY
net 49.0000.0000.1004.00
is-type level-2